Budget wishlist: Here're the key challenges for renewable energy sector

KEY DEVELOPMENTS

Production-linked incentive (PLI) schemes:

• Solar cell and solar module manufacturing: The PLI scheme with a financial outlay of Rs 4,500 crore for manufacturing of ‘High Efficiency Solar PV Modules’ witnessed an overwhelming response and received proposals to setup 54.8GW of manufacturing capacity. 
• Advanced chemistry cell (ACC) battery manufacturing: In May 2021, govt approved PLI scheme for manufacturing of 50GWh ACC batteries with an estimated outlay of Rs 18,100 crore for 5 years, starting from the date of manufacturing. 
• Mandate to deploy biomass in coal fired power plants: The Ministry of Power has issued a mandate to coal fired power plants to blend 5 per cent biomass in overall fuel usage in next one year and overall 7 per cent in subsequent year. 
• ISTS waiver: The Ministry of Power extended the inter-state transmission system charges waiver on solar, wind energy, hydro storage and battery energy storage systems planned to be commissioned by June 2025. 
• Safeguard duty: The applicability of duty ended in July 2021, resulting in lower cost for importing solar cells and modules thus keeping a check on cost of power generation.  

Industry ask

• Renegotiation of tariffs: Some states have recently asked project developers to renegotiate the tariff discovered through bidding and as agreed in the power purchase agreement for RE. This would adversely affect the viability of these projects given these were installed at the prevalent market project costs. This also adversely affects the investment scenario in the sector. 
• Imposition of taxes and duties on RE components: The goods and services tax (GST) on RE products from 5 per cent to 12 per cent will increase the cost of project development. Further, basic customs duty of 25 per cent on solar PV cells and 40 per cent on solar modules would be applicable starting April 2022, which will increase the cost of project dependent upon imported cells and modules. 
• Slow progress in award and implementation of tenders: The bids for large tenders have been notified. However, the pace of finalising the bids has been slow, which has hampered the capacity realisation on ground. 
• Amount overdue to RE generators: The amount overdue from discoms to RE generators has increased from Rs 13,761 crore in March 2021 to Rs 19,341 crore in December 2021. Delayed payment is creating cash flow problems and financial viability.